Merchant Cash Advance Vs Traditional Bank Loans

reilcapseo · July 02, 2019

At REIL Capital, we talk to real small business owners every day; they tell us all about their successes as well as the difficulties they’re having. One of those difficulties we hear about over and over again is funding problems. Whether we like to think about it or not, cash is king in today’s competitive business environment and small business owners are under the most pressure of all. To a small business owner, having access to the capital they need to take care of everyday expenses like payroll, supplies, and bills can mean the difference between staying in business and giving up on their dream. Unfortunately, loans aren’t always easy to get, especially for business owners with poor credit scores. Luckily, there’s another option to get a little working capital that doesn’t rely solely on your credit score. Here’s some information about merchant cash advances and how they differ from traditional bank loans.

What is a Merchant Cash Advance?

When you’re a little short on cash for the month, a merchant cash advance may be exactly what you need. It works by allowing you to borrow based on the strength of your monthly revenue. Typically, you can borrow a lump sum amounting to about 80%-120% of your monthly revenue; in exchange, you’ll agree to pay a percentage of your daily credit and debit card sales (or a daily fixed amount) over a term of 3-18 months.

Merchant Cash Advance vs. Traditional Bank Loan

There are a number of reasons why small business owners rely on merchant cash advances to take care of their day-to-day expenses. They differ from traditional bank loans in lots of important ways that make them ideal for the fast-paced world of small business.

·        Fast and Easy Access to Capital – When you go to a bank for a loan, it could be months before you actually have that money in your account and if your credit score isn’t so good, you may be completely out of luck. Before you get approved, you’ll have to fill out reams of paperwork, produce lots of documentation, and wait weeks and weeks. With a merchant cash advance from REIL Capital, all you have to do is fill out our application and turn in 3 months of business bank statements. If you’ve been in business at least 6 months, have a credit score of 480 or better, and have at least $8,000 in monthly revenue, you could be approved and have money in your account in as little as 24 hours.

·        Non-Recourse – A merchant cash advance is considered non-recourse debt, meaning that it’s supported by collateral. If you should default, you won’t be liable to repay any amount above the value of the collateral. With some traditional loans, you could be liable for additional money above and beyond your collateral amount in the event of a default.

·        Flexible Payment Terms – While most merchant cash advances are paid back with a daily remittance, depending on the strength of your business history and your credit score, you could be eligible for weekly payments. Payments can also be made as a percentage of credit/debit card sales or as a regular, fixed amount. In addition, you may be able to receive pre-payment terms that reduce your costs if you pay back your cash advance early.

As you can see, a merchant cash advance can be a real lifesaver for small business owners who need working capital right away. If you need money for your business and can’t afford to wait around for a traditional bank loan, get in touch with REIL Capital right away! Call (888) 601-7345, fill out our online contact form, or visit our website and chat live with a representative on your computer. Don’t hesitate; your bills won’t wait for you!

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